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Qualifying income is your self-employment and property income added together before expenses, taken from your tax return two years earlier. For a 6 April 2027 start, HMRC uses your 2025-26 return and the £30,000 line.
Qualifying income is the single number that decides whether, and when, Making Tax Digital for Income Tax (MTD) applies to you. GOV.UK puts it simply: it is "the amount before expenses (also known as turnover)". The guidance below follows GOV.UK's qualifying income page, last updated on 11 September 2026 and checked on 15 October 2026.
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What counts and what does not
| Counts towards qualifying income | Does not count |
|---|---|
| Self-employment turnover, before expenses | Pay from employment (PAYE) |
| UK property income, before expenses | Dividends, including from your own company |
| Foreign property income, if you are UK resident | The State Pension and private pensions |
| Your share of a jointly owned property | Your share of partnership profit as a partner |
| VAT you include in your business income | Transition profits from basis period reform |
| Income from a source that has stopped, if another continues | Qualifying care relief receipts, such as fostering |
GOV.UK also leaves out one-off transactions in UK land and income from UK REITs and PAIFs. A partnership share still has to go on your tax return. It just does not count towards the MTD test.
Worked examples
Landlord and sole trader. GOV.UK's own example is £25,000 of rent plus £27,000 of self-employment income. Qualifying income is £52,000, so that person was over the £50,000 line for the first group.
Electrician. An electrician's 2025-26 turnover is £38,000. Van, tools and materials cost £14,000, so the profit is £24,000. Qualifying income is £38,000, not £24,000, so MTD starts on 6 April 2027.
Joint landlords. Two siblings own a flat that brings in £30,000 a year and split it equally. Each has qualifying income of £15,000 from it. If one of them also has £16,000 of self-employed turnover, their total is £31,000. That sibling joins MTD in April 2027 and the other does not.
CIS subcontractor. A plasterer is paid £32,000 gross, and the contractor takes 20% off under the Construction Industry Scheme (CIS). The tax return records the gross pay as income and the deductions separately, so qualifying income is £32,000.
A few rules that catch people out
- The test year runs two years behind. HMRC uses the return you submit in the tax year before you would start. For 2027-28, that is the 2025-26 return, due by 31 January 2027. For 2028-29, it is the 2026-27 return.
- Short or long accounting periods. If you traded for only part of a year, HMRC works out what a full year would have been. GOV.UK's example is six months of trading, which HMRC doubles. Landlords must do this themselves for property income.
- Changing a return. If you amend your return before the tax year starts and that takes you over the line, you need MTD for that year. A change made after the tax year starts only counts if it takes you below the line.
- Not UK resident. Only UK property income, self-employment income declared on your UK return, and UK land dealing count.
- Net shares. If you only receive your share of a joint property after expenses, HMRC uses that net figure.
What this means for you
If your 2025-26 self-employment and property income before expenses was more than £30,000, MTD starts for you on 6 April 2027 and your first quarterly update is due by 7 August 2027. If it was £20,000 or less, you are automatically exempt for now and there is nothing to apply for. Between £20,000 and £30,000, keep an eye on your 2026-27 figures, which decide the 6 April 2028 group.
HMRC writes to people it thinks are over the threshold, but GOV.UK says you must check even if no letter arrives. If HMRC holds out-of-date information, for example about a business you have closed, tell HMRC so that your record is corrected.
Steps to work out your figure
- Find your 2025-26 figures, or your best estimate if you have not filed yet. The return is due by 31 January 2027.
- Add your self-employment turnover before any expenses. If you are in CIS, use the gross pay, not the amount after deductions.
- Add your property income before expenses. For a joint property, use only your share.
- Leave out wages, dividends, pensions and any partnership share.
- Compare the total with £30,000 for a 6 April 2027 start and £20,000 for 6 April 2028. The free MTD check does the sums with you.
- If you are over the line, choose software or someone to do the updates, and sign up before your first deadline.
There are guides for each trade in the trades section, and more on joint ownership and rent in the landlord section.
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Questions people ask
Is qualifying income my profit?
No. It is your income before expenses, which HMRC also calls turnover. Someone who takes £35,000 and spends £15,000 on materials has qualifying income of £35,000, not £20,000.
Does my salary from a job count?
No. Pay from employment, dividends, the State Pension, private pensions and your share of a partnership's profit are all left out. Only self-employment and property income count.
Which year's income does HMRC look at?
The tax return two years before the year you would start. For a 6 April 2027 start, that is your 2025-26 return, which is due by 31 January 2027.
I own a rental property with my partner. Does all the rent count?
No. Only your share counts. GOV.UK's example is £50,000 of rent shared equally, which is £25,000 each.
Does CIS tax taken off my pay reduce my qualifying income?
No. Your tax return records your gross pay as income and the CIS deductions separately, so it is the gross figure that is used.
What if my income drops below the threshold later?
Once you are using MTD, you can choose to stop after three tax years in a row with qualifying income at or below the threshold.
Sources
- Work out your qualifying income for Making Tax Digital for Income Tax (GOV.UK)
- Find out if and when you need to use Making Tax Digital for Income Tax (GOV.UK)
- Find out if you can get an exemption from Making Tax Digital for Income Tax (GOV.UK)
- What you must do as a CIS subcontractor: Pay tax and claim back deductions (GOV.UK)
- The Income Tax (Digital Obligations) Regulations 2026, SI 2026/336 (legislation.gov.uk)
This is general information to help you understand the rules. It isn't tailored to your circumstances, so check your own position before acting on it.
Righto Tax is a trading name of NJG Consultancy Ltd, registered in England and Wales, company number 16095900. Registered office: Jubilee House, East Beach, Lytham St Annes, FY8 5FT.
What happens next
- Use the free Making Tax Digital checker to see your own start date and deadlines.
- See what Righto Tax for Trades does for you, and join the waitlist.
- Questions about this page? Email hello@rightotax.co.uk.